In a promising development for the electric vehicle (EV) industry, Tesla, the renowned American electric car manufacturer, appears to be on the brink of receiving the green light for its foray into the Indian market. According to a recent media report, a high-level meeting convened at the Prime Minister’s Office on Monday was primarily convened to assess the progress of electric vehicle manufacturing in the country’s next phase.
The discussions encompassed the long-pending investment proposal from Tesla. The focal point of this gathering was a comprehensive examination of overarching policy matters, with a keen emphasis on expediting approvals by January 2024. Notably, Tesla’s investment proposal was brought to the forefront, garnering significant attention.
It’s worth noting that Tesla initially aimed to penetrate the Indian market in 2021, advocating for a reduction in the hefty 100 percent import tax levied on EVs. Regrettably, this plan did not materialize as intended. However, in August 2023, the Indian government revisited the issue by contemplating a reduction in the import tax on EVs for Original Equipment Manufacturers (OEMs) who commit to establishing local manufacturing units. This strategic move paves the way for the American automaker to introduce its entire array of models in India, in addition to the new vehicles it aspires to manufacture domestically.
India’s novel EV policy stands to facilitate car manufacturers in bringing their models to the Indian market via the Completely Built-Up (CBU) route, subject to a significantly reduced tax rate as low as 15 percent, in stark contrast to the prevailing 100 percent tariff. This substantial tax cut is applicable to vehicles with a price tag exceeding $40,000 (approximately Rs 33.29 lakh).
Notably, the Indian government is poised to secure commitments from companies to cultivate a robust ecosystem for suppliers, with a mandated 20 percent of components being locally sourced within the initial two years. This percentage is expected to progressively rise to 40 percent by the end of the fourth year, marking a pivotal milestone in the Indian EV industry’s growth.
